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Credit rating agency ICRA in its latest report has said that the cement industry is expected to record an 18-20 per cent volume-based growth to around 355 million metric tonnes and even to surpass pre-COVID levels by 6 per cent in the current fiscal (FY22), driven by continued strong rural housing demand and pick-up in infrastructure activity. However, it said high input costs on account of inflationary pressure are resulting in a decline in operating margins by 440-480 basis points to around 19.8-20.2 per cent in FY2022.

The report said that despite the increase in the net sales realisations by 5 per cent, the Operating Profit Before Interest, Taxes, Depreciation and Amortisation (OPBITDA) per metric tonne declined by 10 per cent Y-o-Y in the first 9 months of FY2022 to Rs 1,124. It said this is 'primarily due to increase in input prices - the raw material, power & fuel and freight expenses which are higher by 12 per cent, 31 per cent and 5 per cent Y-o-Y respectively. For the full year, the continued elevated costs would push down the OPBITDA/MT by 16-18 per cent to Rs 1,030-1,050/MT.

According to the report, all-India cement production registered a growth of 25 per cent at 290 million metric tonnes in the first 10 months of FY2022 compared to the year-ago period. It was higher by 4 per cent when compared to pre-Covid levels of 10M FY2020.